property trusts re home insurance

nudger8

i would like the MSE website  to make its users aware that many insurance companies will not insure homes that are partly or entirely the subject of a trust agreement.My mother has been insuring her home for the last 10 years without knowing this and should she have had a claim,she would not have been covered!She only discovered this recently from her solicitor.She now has cover with a specialist company.The premium is double to what it would be if her house was not in a trust arrangement.

MyRealNameToo

nudger8 said:

i would like the MSE website  to make its users aware that many insurance companies will not insure homes that are partly or entirely the subject of a trust agreement.My mother has been insuring her home for the last 10 years without knowing this and should she have had a claim,she would not have been covered!She only discovered this recently from her solicitor.She now has cover with a specialist company.The premium is double to what it would be if her house was not in a trust arrangement.

So the insurer said this or the solicitor and she's taken the solicitors word? 

Would need more details to know if she would or wouldnt be covered but would have thought the trust/contracts could be drafted to create an insurable interest in the property and then its just ensuring you are answer the questions about ownership etc accurately - you can't click "I own it outright" if you dont own it at all just because no other option applies either. 

Keep_pedalling

What sort of trust are we talking about here? It could very well be that the trust is responsible for the building insurance and your mother the contents. 

If this is an IPDI trust created by your father’s will and your mother has legal ownership of 50% of the property then it gets complicated. 

Ms_Chocaholic

How did you find this out and how has it come about.  How would the insurer know for example if you had a claim.

dunstonh

i would like the MSE website  to make its users aware that many insurance companies will not insure homes that are partly or entirely the subject of a trust agreement

Putting aside that most property trusts are a complete and utter waste of money, surely it should be the seller of the trust to make the trustees aware of this?

MSE focuses on the majority and property trusts are a minority thing.

poseidon1

nudger8 said:

i would like the MSE website  to make its users aware that many insurance companies will not insure homes that are partly or entirely the subject of a trust agreement.My mother has been insuring her home for the last 10 years without knowing this and should she have had a claim,she would not have been covered!She only discovered this recently from her solicitor.She now has cover with a specialist company.The premium is double to what it would be if her house was not in a trust arrangement.

The post below from over a year ago, indicates that insurers who provide buildings cover, in full knowledge of trust ownership, have been steadily withdrawing from this narrow specialist market.

https://forums.moneysavingexpert.com/discussion/6520997/buildings-insurance-property-in-trust#latest

This is a matter of growing concern since there are entirely legitimate reasons for the creation of such trusts especially in the ever increasing  circumstance of 2nd marriages, and each parent wishing to ensure children on each side,  eventually benefit on 2nd death of the surviving spouse.

Seems to  me that where the surviving spouse is co owner with the trust with a requirement under the trust to keep the property insured, there should  in theory be no issue with regard to insurable interest.

Quite why ( as identified by the OP) , such arrangements would attract a significant premium above the normal cost of a  standard buildings policy, may well be down to smaller cohort of companies prepared to offer cover.

OP was quite right to flag this issue since MSE forums ( death and probate especially)  regularly receive queries on these property trusts, so ability to insure and properly declare the insured parties, well worth identifying as a potential complication.

Yorkie1

poseidon1 said:

nudger8 said:

i would like the MSE website  to make its users aware that many insurance companies will not insure homes that are partly or entirely the subject of a trust agreement.My mother has been insuring her home for the last 10 years without knowing this and should she have had a claim,she would not have been covered!She only discovered this recently from her solicitor.She now has cover with a specialist company.The premium is double to what it would be if her house was not in a trust arrangement.

The post below from over a year ago, indicates that insurers who provide buildings cover, in full knowledge of trust ownership, have been steadily withdrawing from this narrow specialist market.

https://forums.moneysavingexpert.com/discussion/6520997/buildings-insurance-property-in-trust#latest

This is a matter of growing concern since there are entirely legitimate reasons for the creation of such trusts especially in the ever increasing  circumstance of 2nd marriages, and each parent wishing to ensure children on each side,  eventually benefit on 2nd death of the surviving spouse.

Seems to  me that where the surviving spouse is co owner with the trust with a requirement under the trust to keep the property insured, there should  in theory be no issue with regard to insurable interest.

Quite why ( as identified by the OP) , such arrangements would attract a significant premium above the normal cost of a  standard buildings policy, may well be down to smaller cohort of companies prepared to offer cover.

OP was quite right to flag this issue since MSE forums ( death and probate especially)  regularly receive queries on these property trusts, so ability to insure and properly declare the insured parties, well worth identifying as a potential complication.

I'm the OP from that linked thread. The issue we encountered was that while most standard domestic insurers are willing to note an insured interest on the buildings policy, they will only do so for a person as opposed to a legal entity. In other words, they would add the trustees if people, but not if Smith Ltd Solicitor Trust Corporation.

Then, when speaking with the solicitor managing the retained trust more recently, he indicated that his experience was that many regular insurers would in fact note the interest anyway, but it depended on who you happened to speak to when you rang to note the interest - pot luck, essentially. Which is by no means satisfactory!

@nudger8, who are you now insured with?

nudger8

this was higlighted by her solicitor and confirmed by her broker,Bickers Insurance Brokers,who arranged insurance with Am Trust Speciality ltd.

it is a discretionary will trust.

if a claim had been made the insurer would presumably refuse the claim as the trust has a half share in the property.